China's animal meal, soybean prices surge as market braces for tariffs

* Beijing threatened to slap hefty import duties on U.S. soybeans

* Move expected to boost production costs for mills, feed makers

* Soymeal futures hit record highs, rapemeal shoots to July 2016 high

* Investors also pounce on soymeal call options

* China has world's largest pig herd, main demand driver for soymeal

BEIJING, April 9 (Reuters) - Chinese prices of meal used in animal feed and soybeans soared on Monday as investors and processors rushed to scoop up key agricultural products after Beijing announced plans to slap an additional duty on U.S. soybean imports amid rising trade tensions.

Soymeal futures rose by as much as 6.5 percent to a record 3,400 yuan ($538.83) per tonne. Rapemeal, an alternative to soymeal, shot to its highest in nearly two years and locally grown soybeans climbed to their highest since October.

After the market closed on Wednesday for a two-day public holiday, the world's top importer of the oilseed said it will impose tariffs on soybeans and 105 other products from the United States in retaliation for Washington's aggressive trade actions.

This will significantly increase the cost of soymeal in China, which buys about 60 percent of globally traded soybeans. They are crushed to make meal, a key ingredient in feed for the world's biggest pork producer.

As their soymeal costs rise and supplies potentially tighten, mills and feed makers will also start to seek alternative ingredients, like rapemeal.

The Chinese government did not give a date for the enforcement of the new duties, adding to market jitters, and there were signs that the world's two top economies may start to negotiate as tensions ratchet up.

But if Beijing goes ahead with the threat, "(companies) will have simply pay the tariff and the cost of production will increase," said a Melbourne-based grains trader, who declined to be named as he is not authorized to talk to the media.

Soymeal, one of the country's largest agricultural futures markets, traded on the Dalian Commodity Exchange for delivery in September settled on the day up 4.6 percent at 3,340 yuan per tonne.

Investors also piled on bullish options bets to protect against surging prices. Call options for September expiry with strike prices just above the settlement price were some of the most heavily traded soymeal options on Monday.

Open interest, a measure of liquidity in a contract, in September calls with a strike price of 3,500 yuan per tonne jumped to 5,590 lots on Monday from just above 4,000 lots on Wednesday and zero on Tuesday before the tariff news.

An option gives the holder the right to buy or sell a future at a certain price.

September futures for rapemeal shot to as much as 2,734 yuan, their loftiest since July 2016. The contract traded on the Zhengzhou Commodity Exchange settled up 4.6 percent at 2,722 yuan.

"There is still uncertainty in the market," said Yang Linqin, an analyst at Cofco Futures.

"The date (for the Chinese tariffs) has not been decided yet. And we still need to watch as both sides are now in talks, that's a recent development." ($1 = 6.3100 Chinese yuan renminbi) (Reporting by Josephine Mason and Dominique Patton; Additional reporting by Colin Packham in SYDNEY; Editing by Christian Schmollinger)